Responding to the FCA consultation on Broadening access to financial advice for mainstream products, which closed yesterday, Aegon has called for the forthcoming holistic review of the advice / guidance boundary to allow regulated firms to offer a more personalised form of guidance.
Steven Cameron, Pensions Director at Aegon said: “We welcome the FCA consultation looking at a new ‘simplified’ way of advising customers on investing up to £20,000 of excess cash, possibly for the first time, in a mainstream stocks and shares ISA. Aegon strongly supports the benefits of advice, but we believe changes are needed to current regulatory requirements to deliver value to those with such modest sums to invest.
“This consultation around a core investment advice service has a very specific focus which is more likely to appeal only to the very largest of firms with a large customer base currently with excess cash savings. But the cost savings while the service remains under an ‘advice’ definition are limited.
“Our hope is this is a first step in a longer journey which will include the FCA and Treasury’s holistic review of the advice / guidance boundary, ideally paving the way for regulated firms to offer a more personalised form of guidance. Allowing a guidance service to complement advice could significantly reduce costs while retaining appropriate protection so consumers with smaller sums receive good outcomes.”
Regarding the timing of introducing the new simplified form of advice, Cameron continues: “The FCA hopes to finalise rules in time for the 2024/25 ISA season. By then, the economic environment is likely to be very different from when the benefits of investing excess cash were first discussed. Inflation usually means cash savings lose money in real terms, but come April 2024 we could see interest rates of 5% and inflation at -1%, meaning cash could generate a 6% real return. This might make first time investing at that particular moment in time a less appealing proposition.”
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